טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
Ph.D Thesis
Ph.D StudentWarszawski Jacob
SubjectStudies on Housing Affordability
DepartmentDepartment of Architecture and Town Planning
Supervisor Dr. Danny Ben-Shahar
Full Thesis text - in Hebrew Full thesis text - Hebrew Version


Abstract

Housing affordability long has been on the agenda of governments and policymakers worldwide. While policy and academic studies typically define affordability in terms of housing costs relative to some ability to pay criterion (e.g., Robinson et al., 2006), few studies have focused on bias in affordability measurement. In that regard, some households may fail to exhibit affordability problems owing to sub-standard consumption of housing. Conversely, households consuming above-standard housing may exhibit excessive household cost burdens [see Thalmann (1999)]. Indeed, prevailing metrics may lead to bias in both positive and normative assessment of affordability challenges. This study introduces new measures of housing affordability that correct for bias in housing consumption. We first employ demographic and locational attributes to estimate household standardized housing consumption. A time-variant and endogenously determined standardized consumption is then used to estimate effective housing affordability. We further explore the association between effective housing affordability and household socio-demographic and locational characteristics. Also, we study factors associated with sub-standard consumption of housing.  The analysis derives from an extensive Israeli sample of 256,000 observations including household socio-demographic, economic, locational, and dwelling unit characteristics over the 1992-2012 period. Research findings indicate that failure to correct for household sub- and supra-standard consumption of housing results in substantial underestimation of affordability challenges. Further, our findings show that affordability problems in Israel have trended markedly higher in recent decades. Results also provide evidence of increasing inequality in housing consumption and housing affordability. Findings indicate the importance of individual socio-demographic characteristics including years of education, gender, nationality, tenure mode, and housing location in determination of sub-standard housing consumption and damped effective housing affordability. Overall, our proposed method resolves potential consumption related bias in assessment of individual housing affordability and leads to important revisions in measurement thereof.

We further propose and examine a new measure for assessing the state of housing affordability inequality. We employ our micro-level data set by which we estimate and evaluate the time-varying housing affordability inequality in Israel over the period 1992-2011. Results show that our developed housing affordability inequality Gini coefficient has considerably increased in the past decade. Moreover, controlling for changes in net income inequality and macroeconomic conditions, housing affordability inequality is found to positively correlate with average housing prices (computed in net income terms). Outcomes are robust to the alternative Atkinson inequality index. Furthermore, our method allows for an examination of segmentation in housing affordability. We find that segmentation particularly prevails across household head’s gender, family status, working status, the number of income providers in the household and household geographical residence. Research outcomes may direct policymakers in designing policies aiming to reduce inequality and segmentation in housing affordability as well as new insights important to the design of programs to alleviate housing distress.